Background
Padawan
Developments
Decision 15
Comment



There have recently been new developments regarding the ongoing copyright levies saga. The Constitutional Court and the Private Copy Commission have issued new decisions which, while providing useful clarification, are unlikely to bring the heated debates on this issue to a close.

Background

The issue of copyright levies has attracted considerable attention in recent years.

The existing system is aimed at compensating authors for the private copying exception applicable under French copyright law. While a number of jurisdictions adhere to the principle of compensation, the specifics of the French system have made it prone to criticism. Concerns voiced against the copyright levies system are based on two main issues:

  • the method used for calculating rates; and
  • the distortion of competition resulting from the fact that French rates are higher than in most jurisdictions.

Padawan

The intricacies of the French system came under attack following the European Court of Justice's (ECJ) landmark Padawan decision, which essentially highlighted that copyright levies do not apply to reproduction equipment acquired by professionals for purposes other than private copying (for further details please see "Copyright levies: the Conseil d'Etat excludes professionals"). The Council of State, France's highest administrative court, issued a decision on June 17 2011 which cancelled a key decision of the Private Copy Commission (Decision 11 of December 17 2008) in order to align with the ECJ. The Council of State thereby invalidated Decision 11 for making no distinction between devices for professional use and recording devices that could be deemed to be used for private copying.

The implementation of Decision 11 was delayed for six months.

Developments

A transitory regime regarding copyright levies was established through Law 2011-1898,(1) which essentially applied the Padawan decision.

Subsequently, during the course of proceedings before the Council of State, the Union of Audio-Visual Electronic Industries called on the Constitutional Court to question the constitutionality of Article 6.1 of Law 2011-1898, which maintained rates until December 31 2012 in order to allow the Private Copy Commission time to issue a new decision. On July 20 2012 the Constitutional Court ruled that this article was in line with the Constitution.

However, another question was filed before the Constitutional Court by telecommunications provider SFR and Copie France, a collecting society, regarding Article 6.2 of the new law, which they claimed prevented their actions in court.

Article 6.2 provides that levies for devices not acquired for professional use, but which had already been collected pursuant to the cancelled Decision 11 (for which court proceedings had been initiated before June 17 2011 and which had not led to a res judicata decision), were deemed to be valid.

On January 15 2013 the Constitutional Court ruled Article 6.2 to be unconstitutional. The court based this ruling on previous case law, holding that for such provisions to be admissible, they must be balanced against:

  • the general interest;
  • the principle of non-retroactivity of penalties; and
  • res judicata decisions.

In light of this, the Constitutional Court took the view that the financial reasons behind the levies at stake – the amount of which could not be determined – were insufficient to justify a limitation to the right of action of the involved entities.

Decision 15

In addition, the Private Copy Commission issued Decision 15 on December 14 2012 in an effort to provide clarification on the applicable rates from January 1 2013 onwards.

Article 4 of Decision 15 provides long sought-after clarification on the method of calculation of rates.

Other interesting provisions contained in Decision 15 include a mechanism of tax relief for high-recording-capacity devices, introduced in an effort to avoid disproportionate impact of the levy on the final price of such devices.

Decision 15 also reasserts the principle of the application of copyright levies to media tablets by making their taxation permanent.

Comment

Decision 15 was rendered in a climate of uncertainty. An in-depth review of the French copyright levies system is under consideration, and expert reports on this issue are currently in the pipeline. Whether Decision 15 remains unchallenged remains to be seen. In light of the above, it appears that these new developments are merely another episode in this saga, which promises to continue for the foreseeable future.

For further information on this topic please contact Vincent Denoyelle or Camille Pecnard at Hogan Lovells by telephone (+33 1 53 67 47 47), fax (+33 1 53 67 47 48) or email (vincent.denoyelle@hoganlovells.com or camille.pecnard@hoganlovells.com).

Endnotes

(1) December 20 2011.